$USO option bulls score big profits

Bullish option traders have turned big profits with the sharp increase in the U.S. Oil Fund (USO).

On Feb. 7, Market Rebellion’s Unusual Activity Service found that 3,000 July $70 calls were bought as part of a bullish spread for $4.60 to $4.66 above the existing open interest of 635 contracts with shares at $64.71.

Those calls have traded for as much as $17.00 this session, over 3 times their purchase prices. The stock spiked 27.07% in the same time period, a large move but nowhere near that of its options on a relative basis.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

USO settled higher by 3.66% at $82.37 today.